how to get the factor rate

Hi rickymontilla,

I haven't heard of factor rates separately. I've only heard of interest rates. Can you please explain as to what you're trying to say? It will be helpful for me as well as others to answer your queries.

Thanks

Hi jameshogg,

sorry for the lack of info.

Actually I am planning to get a loan from a bank as follows:
Principal 50,000.00
Interest Rate 1.25% per month or 15% per annum (Add-on Interest)
Terms is 36 months to pay.

To get the monthly payment they gave a factor of 0.040277778 to be multiplied with the principal

50,000.00 X .040277778 = 2013.89 monthly amortization.
(Principal 1,388.89 + Interest 625)

I was just asking what is their formula to get the factor of .040277778 for 36 months.

Note: they have different factor depending on the terms and interest as follows:

Term Factor Monthly Effective
Add-on Interest Interest

12 months 0.095833333 1.25% 26.62%
18 months 0.068055556 1.25% 26.75%
24 months 0.054166667 1.25% 26.58%
36 months 0.040277778 1.25% 25.98%

i would appreciate your help

Thanks

The table reads as follows

Term Factor Monthly Int. Rate Effective Int. Rate
12 months 0.095833333 1.25% 26.62%
18 months 0.068055556 1.25% 26.75%
24 months 0.054166667 1.25% 26.58%
36 months 0.040277778 1.25% 25.98